CALGARY • Enbridge Inc. is working to open a major new pathway to the U.S. Gulf Coast for Alberta bitumen, solidifying a commercial link between the world’s No. 3 crude deposit and the Texas refining corridor that has so far eluded industry planners.

Canada’s largest pipeline company is spending $2.8-billion to “twin” its Spearhead pipeline from Flanagan, Ill., to Cushing, Okla., and another $1.1-billion to nearly triple capacity on its Seaway system between the Midwest storage hub and the Houston area.

By mid-2014, the two pipelines will be able to transport 775,000 barrels of Alberta’s extra-thick oil for processing at coastal refineries, Steve Wuori, president of Enbridge’s liquids pipeline unit, said in an interview this week.

“There’s a bottleneck, and that’s some of what this pipeline system is designed to clear,” he said. The Chicago-to-Houston path will “provide better pricing for Canadian producers but also better access to U.S. Gulf Coast refiners to that barrel.”

The Enbridge route is taking shape as TransCanada Corp.’s rival Keystone XL project lurches into its sixth year of review by the U.S. government.

It is one of several alternatives to the TransCanada project that is bolstering the outlook for Western Canada Select heavy blend, which plunged as much as US$40 below the main North American oil price last winter.

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On Thursday, WCS for November delivery traded at a discount of US$29.50, according to oil broker Net Energy Inc. That gap, or differential, could shrink to US$16.75 next year as demand for heavy oil increases and because new transportation capacity “is just around the corner,” researchers at Canaccord Genuity said Thursday in a note to clients.

Bitumen-only unit trains are set to roll south from a Canexus Corp. terminal north of Edmonton next month, for example, while an anticipated startup of BP Plc’s Whiting refinery near Chicago is expected to boost demand for Alberta’s heavy oil, analysts say.

“There’s still going to be a lot of volatility,” said Judith Dwarkin, director of energy research at ITG in Calgary. “Over time, we would expect the spread to narrow, but it’s still going to be a bumpy ride.”

Calgary-based Enbridge is adding pump stations to push more Alberta crude through existing lines and laying new pipe on old corridors at a time of deep uncertainty for projects such as Northern Gateway and Keystone XL.

The piecemeal expansion included the purchase, and subsequent reversal, of the Seaway pipeline last year as part of a joint venture with Enterprise Products Partners LP.

The partners are laying a parallel line big enough to more than double the pipeline’s capacity to 850,000 barrels a day. Enbridge’s Flanagan South project is designed to boost capacity from the Chicago area to Cushing to nearly 600,000 barrels a day.

The company is also planning a $1.1-billion expansion, to 880,000 barrels a day, of its Alberta Clipper pipeline between Hardisty, Alta., and Superior, Wisc.

It expects approval from the U.S. State Department — which requested a supplemental environmental impact study for the three-year-old line — by next summer, Byron Neiles, Enbridge’s senior vice-president for major projects, said at an Oct. 2 investor day in Toronto.

“A lot of what we’ve been doing is on existing rights of way that we already have pipelines in,” Mr. Wuori said. “There is no question” that such an approach “is more straightforward” than building across virgin routes, he added.

Major conduits continue to face pushback. Business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers on Thursday published an open letter urging U.S. President Barack Obama to approve Keystone XL’s $5.3-billion northern segment, which would cross the U.S.-Canada border.

Keystone’s $2.3-billion southern portion is nearing completion, with startup expected before year-end, the company said last week.

Initial capacity of the Gulf Coast pipeline, which will deliver crude from Cushing to Nederland, Tex., will be 700,000 barrels a day, with an option to expand to 830,000 barrels.

TransCanada broke the pipeline in two after a protracted fight with opponents culminated in the U.S. government rejecting it.

“These days that’s normal business,” said Robert Schultz, a professor at the University of Calgary’s Haskayne School of Business. Opposition to new pipelines is “not a surprise anymore, which is why it’s harder to hit a home run.”

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